One thing that I noticed in this article and charts was the unprecedented growth of auto loans. They too have skyrocketed. That seems like another "bubble" waiting to happen.
And now I’m wondering if the same dynamic is happening in education: schools increase tuition because govt-subsidized loans are easily accessible.
A still relevant earlier discussion: https://news.ycombinator.com/item?id=14476381
Perhaps mortgages should have longer terms too?
Note: while he quotes 60-80 years, the concrete is still in that 30-40 year timespan.
The distinction is meaningful as the comments earlier in the thread are talking about how long a new car will last before it needs work (beyond your basic oil changes, etc.). If you are willing to put money into major repairs and upgrades, there is no real reason why a vehicle cannot last centuries as well, as classic car enthusiasts can attest.
Here is their business cycle:
1. Purchase a used car from a customer for 80% of "fair market value."
2. Sell the car on a $0-down, 7-year note for 110% of "fair market value."
3. Undoubtedly the loan goes into arrears, and the dealer will disable the ignition system after a certain amount of time. The "owner" will be billed for the tow as well as multiple "recovery fees."
4. Sell the car again for 110% of "fair market value."
5. Repeat.
Multiple times I have been told "we don't want them to pay off the car; we make less money that way."
I remember one particular dealer bragging to me about the fact that he had sold a 2009 Honda Civic 11 times in 4 years. That is, 11 sales and 10 repossessions over the course of 4 years. The saddest part was hearing that over 70% of their car notes would go into arrears within 4 months.
It's wired directly into the ignition system. Despite having a computer engineering degree and enough experience to be reasonably confident in my ability to analyze unknown electronic systems, I spent a lot of time very carefully going through all of the connections to convince myself I wasn't going to brick my vehicle by removing the device. In the end it was pretty easy to yank the device. The hardest part was patching the ignition wire, which had been cut to install the device.
Conclusion from the previous paragraph? It's not that hard if you know what you're doing, but I'd bet that something like 99% of people wouldn't have a clue how to remove it even if they noticed it was there at all.
I recall buying a Honda back in the late 90s. Dealer tried to up sell me on having the VIN etched into all the windows. I declined. Drive the car home and realize it has the VIN etched in all the glass.
The dealer is getting $4K (or more in the cases where they repossess the car and re-lease it) because the buyer often has few options on how to get transportation so they're implicitly forced to take worse terms (say, they need a car immediately to get to their low-wage job otherwise they are fired and forced into worse poverty). Of course, you can still say the car doesn’t have a value until a transaction takes place.
These socio-economics dynamics mean cars have much more of a spectrum of "value" than just one-off car purchases. Framed another way with the parent comment, buyers are often under implicit economic duress, it's just not duress forced by the seller.
I'm not strictly opposed to markets like subprime auto/personal loans, as often these markets would look worse without these options. But a lot of times people see supply-and-demand situations in very limited scope and miss external factors that influence choices.
A perfectly efficient market will push the bids higher and the asks lower. Stocks for example only have a spread of a couple of pennies.
As the markets get less and less efficient, you become more reliant on middle-men to perform transactions. In the dark ages, people would pay 1-pound of gold for 1-pound of salt. In the case of modern society: bonds (and other derivatives) are less efficient to trade and therefore have higher bid/ask spreads than stocks.
Go away from financial instruments, and a 30% spread on bid/ask is actually reasonable. Play Magic: The Gathering? Buying/selling used video games? You're going to pay a pretty large spread.
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"Fair Market Value" is an estimation of the bid/ask spread. There really are two fair prices: the value the buyer is willing to pay, and the value the seller is willing to sell at. These two numbers are all that matters.
By definition, these two prices are fair. Because if they weren't fair, then the buyer (and seller) would reject the deal and the trade will fail.
80% to 110% isn't a perfect split between the buyer and seller, but its "within expectations".
You're doing fairly well if you can get a car dealer to buy your car for 80% of what they sell it for
"I could literally survive the next 10 minutes without buying this" is not the same thing as "if I don't buy this soon, my life will not be significantly worse off."
Poverty's not known for opening up options for people.
I think what you're seeing is that the cars getting advertised, and more specifically the cars that you want are more expensive than they used to be because auto makers are trying to boost margins in a shrinking market by pushing fancy features and higher-end models. But if you look at base-model sedans, they've stayed pretty close in price over the last two decades.
The little indicators if someone in your blind spot is also a HUGE safety increase for drivers and bikers/scooters/etc.
Those should be as standard as seatbelts an airbags in 2020.
Most people are pretty poorly trained and now, often distracted, drivers.
A 2-year-old used car is usually within $1000~$2000 of the original selling price.
Since then we've tacked more gears onto automatic transmissions, hybrids have become more mainstream, sedans and wagons have been replaced with small SUVs as electronic doodads have proliferated. If you don't mind creaky plastic quality is about the same back deep into the 90s for cars that were on reasonably modern platforms in the 90s.
Everything else listed I would want to actively avoid in my next vehicle.
this says more about the vehicles you're interested in than the overall trend in vehicle efficiency. I get ~34mpg out of my hot hatch with a heavy right foot.
The backup cams affect my night vision. When I back out of a parking space at night, I'm hit with the glare. I need my vision to drive!
Humans adapt to adaptive cruise control, lane assist, auto parallel parking, partial autopilot, and any other safety feature. So we get more texting while driving and other dangerous behavior. https://en.wikipedia.org/wiki/Risk_compensation
Cars these days don't age any better than cars from 20yr ago or the more modern cars of the 90s.
I guess anti-corrosion has improved but it hasn't improved by that much. You still have plenty of vehicles that repeatedly rust out in some spot because the salt gets flung there and the surface coatings aren't adequate to stop it.
In a growing fleet, new purchases expand the fleet and necessarily lower the average age. On the other hand, if production falls below replacement rates, the average age of the fleet will increase. Couldn't such a change reflect changes in demographics (number of new drivers added to population) or habits (amount of car-based travel) as much as car durability?
Also, wouldn't such fleet metrics be influenced by the lumpy history of natural disasters like hurricanes flooding densely populated coastal regions?
bought a used 2016 last year for ... ~$12k? Small Focus, nothing fancy. Even that felt like a bit of a stretch, although... I'm getting more conservative with $ as I get older. It's also just 2 of us in the house - no kids, and I get that some people want/need larger cars to haul around kids and stuff. But seeing that an 'average' new car loan is $30k, my mind just... boggles.
Friggin' stupid. I can almost buy two rental houses for that price. At least one that can be in move in condition with a splash of paint and carpet.